Holloway, whose previous management experience involved long spells at Bristol Rovers and QPR, resigned from Plymouth in 2007 less than four months after his first game and then had an even shorter spell at Leicester in 2008, which ended with the club's relegation to League One.
However, he took charge of Championship side Blackpool in May 2009 and, despite the club having been made favourites for relegation, he steered them to the Premier League via the play-offs.
Ahead of Blackburn's visit to Bloomfield Road on Saturday, Allardyce has hailed Holloway's work at the club and said he feels his efforts are not fully recognised.
"He has been a good manager for many years," he said. "This is a major achievement and there are not many managers who have done what he has done and he should be very proud of his successes.
"When you look at what resources they have, we don't give them the plaudits they deserve because they are a small, unfashionable club, but in terms of resources and finance it lies alongside anything Alex Ferguson or Jose Mourinho has done, in reality.
"Ian probably thought he was written off as a manager but got the opportunity to go to Blackpool and he has put all his experience together. He created enough energy and management know-how to take the players that he put together and make them play as a team and they thoroughly deserved what they got in the end.
"It is a fairytale story. Now the hard part is trying to maintain their status in the Premier League."
Allardyce's first management job in England came at Blackpool in 1994, and he led the club to the play-offs in the third tier in his second season. They failed to gain promotion that season or the following year and, despite the club having flirted with relegation for the two seasons before Allardyce's arrival, he was sacked in 1996.
"I still haven't really understood it," he said. "I was in the very early stages of my career as a manager and that sacking could really have damaged my career.
"I was not that established as a manager but losing in the play-off has some credibility by doing well at a club like Blackpool over two years. Thankfully I got the job at Notts County and I continued to go on from there.
"It was a devastating time and I didn't understand it but it is long gone and, as a manager, I've moved on and upwards."